Iconic Tour

The FruitGuys keeps Elon Musk’s employees healthy — while saving America's farms

Fruit-at-work pioneer Chris Mittelstaedt launched The FruitGuys in 1998. His $30 million-a-year company is helping to save small, independent, family-run farms across America.
Source: The FruitGuys

Successful people don't wait around to jump on a trend after it happens. They are the trailblazers, the innovators who set the stage and push beyond the boundaries. Today no one embodies the spirit of a visionary genius more than Elon Musk.

Little did Chris Mittelstaedt know that one day their visionary genius' would align.

A newly married 27-year-old in 1998, Mittelstaedt was working as a fax runner at the Fairmont Hotel in San Francisco while trying to land a job in advertising when he received the unexpected news that his wife was pregnant.

"The clock just started ticking," Mittelstaedt said. "So I called up a couple of friends who were working downtown at the time and asked if there was anything I could do for them, and one of my friends said, 'Yeah. Everyone around here is eating really unhealthy food, drinking Jolt cola and eating chocolate-covered espresso beans. Could you bring us something healthy?'"

It was long before Americans became health-obsessed and workplaces began instituting wellness programs and fitness facilities, yet Mittelstaedt saw an opportunity: Promote a healthy workforce and boost productivity by delivering fruit to offices and sourcing directly from small, independent, and family-run American farms.

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"Once I came up with the idea, I went to the phone book and just started cold-calling companies," said Mittelstaedt. A number of them were interested, but he had no funds to purchase the fruit. "I didn't have two pennies to rub together. But LGT Group—the Bank of Liechtenstein at the time—wanted six crates of fruit and were willing to give me an advance to purchase it."

Soon after, he officially launched his company out of his one-bedroom apartment in San Francisco.

Now, 19 years later, The FruitGuys has 150 employees in 15 locations across the United States and provides smart snacking for 2,700 companies, including Tesla and SpaceX and a number of Fortune 500 firms. It pulls in just over $30 million annually, growing at a rate of 15 percent to 25 percent year-over-year, and it's made the Inc. 5000 List of America's Fastest-Growing Companies for the past nine years.

Chris Mittelstaedt, founder and CEO of The FruitGuys, bootstrapped his company into a $30 million-a-year business.
Source: The FruitGuys

Mittelstaedt believes that while his company's mission-driven philosophy played a key part in his success, he says timing also played a significant role.

Because it was just the beginning of the dot-com boom, Mittelstaedt landed contracts with eBay, Napster and PayPal, long before they became household names. "We served eBay when Pierre Omidyar was there and there were only 12 people in the room, and we'd just walk in and say hello to everybody. At Napster we'd have to leave a box in front of the office and do a secret knock, because they were in stealth mode."

Then, when the dot-com bust happened in 2001, it created further opportunities for The FruitGuys. When many of their clients lost their jobs and moved cross country, they started asking Mittelstaedt to ship their fruit. "That's how we ended up expanding nationwide," he said.

The FruitGuys has never received any venture capital funding. The business was completely bootstrapped, says Mittelstaedt, adding, "People think I'm crazy, especially out here in the Bay Area in Silicon Valley."

His advice to those starting out on their own: "Don't get distracted by the BS of fundraising as a marker of success. It's about are you creating a sustainable business that runs well, produces cash flow, can grow in multiple kinds of economies? Entrepreneurs should focus on execution rather than their ability to sell an idea. That's only the first step."

Serving the community — and SpaceX

Just as impressive as Mittelstaedt's revenue is the company's initiative designed to support local farms and feed the less fortunate. By sourcing from local growers, FruitGuys is providing opportunity for hundreds of small, independent, family-run farms across America, and in 2016 the fruit-at-work pioneer donated more than 2 million servings of fruit to soup kitchens and food pantries across the country.

The company has also set up a community fund, which provides grants of up to $5,000 to small farms and agricultural nonprofits for sustainability projects that have large impacts on the environment, local food systems and farm diversity. Since 2012 The FruitGuys awarded more than $167,000 to 41 sustainable small farms. In 2010 The FruitGuys Community Fund awarded E & M Farm in Vernalis, California, and Kauffman's Fruit Farm in Bird-in-Hand, Pennsylvania, owl boxes as a natural approach to stave off pests. Gabriel Farm in Sebastopol, California, received four honey bee hives to pollinate their orchards.

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"Our whole philosophy comes from the idea of service leadership," said the founder and CEO. "We've always been mission-driven. Whether that's the people who are buying our fruit or the farmers and food pantries."

One person who believes strongly in The FruitGuys' mission: Elon Musk.

In July 2014, The FruitGuys began serving Tesla at its Palo Alto headquarters and its Fremont facility and was later introduced to Musk's sister company SpaceX, in Hawthorne, California.

"The mission of the company really aligned with my own personal principles," says Ted Cizma, SpaceX's global executive chef. "The return on investment for keeping healthy food available for our employees is repaid many many times over through wellness and productivity and morale. And helping small American farmers is certainly one of the reasons why I continue to support them." The FruitGuys is now serving SpaceX's facilities in both Cape Canaveral and Texas.

The return on investment for keeping healthy food available for our employees is repaid many many times over through wellness and productivity and morale. And helping small American farmers is certainly one of the reasons why I continue to support them.
Ted Cizma
global executive chef,  SpaceX

"We might pay a little bit more for it, but we know the fruit is being raised with integrity," said Cizma. "My boss is the poster child for disruptive technology for sure, and SpaceX is focused on trying to find a better, more efficient and different way to do something every day and that's every area of the company, including food and hospitality. It's never never OK to say, 'Well, that's the way we've always done it.'"

Choosing the growers

The company's decision to open additional facilities in America's business hubs — such as New York, Chicago, Boston, Philadelphia and Phoenix — means reaching out to additional farms for sourcing. The FruitGuys base their decision on several factors, including the farm's longevity, the unique varieties and quality of their produce, their practices as well as the farm's history.

"A lot of farms have been around for multigenerations," said Mittelstaedt. "Those farms are important to us because it's a preservation of American heritage. The 15 facilities represent not just the ability to be nationwide but the ability for us to support small agriculture across the U.S. If we have more facilities in a local format, we are then able to buy more produce from local growers in that region and use that product in our mixes."

Jelich Ranch, a certified organic historic orchard in Portola Valley, California, which has been around since 1913, has been providing produce for The FruitGuys since 2009. "They not only help us out by buying our fruit, they are also good listeners," said Skip Parodi, the ranch manager. He told CNBC how, once a year, FruitGuys staff visits the farm to learn about any issues and listen to their needs.

Skip Parodi, the ranch manager, at Jelich Ranch. The certified organic historic orchard in Portola Valley, California, has been providing fruit for The FruitGuys since 2009.
Source: The FruitGuys

"We have bats in this area, so they purchased a bat box for us and helped us install it. They listen to what the issues are," Parodi said, adding, "Sometimes I have too much of one particular thing, like Bartlett pears, and they'll take 100 cases and take the pressure off me to try to sell them locally."

"I hope The FruitGuys stay with us as long as they can, because they are really helping this ranch," said Parodi. "It's not an easy way of life."